The National Highway Traffic Safety Administration announced the decision on Monday.
It would cost the car manufacturer an estimated $1.2bn, about one-third of its net income for 2020, according to securities filings.
Since 2016 GM has tried four times to avoid a recall claiming that the airbag inflators were safe in testing and on the road.
The company was accused of putting profits over safety by owners.
In a statement GM said it still believed that a recall of vehicles is not warranted based on the factual and scientific record, but that it will abide by the NHTSA’s decision and begin taking the necessary steps.
The company has 30 days to give NHTSA a proposed schedule for notifying vehicle owners and starting the recall.
Included in the recall are some Cadillac Escalade, Chevrolet Silverado, Chevrolet Suburban, Chevrolet Tahoe, GMC Sierra and GMC Yukon vehicles built over an eight-year period from 2007 onwards.
Takata used volatile ammonium nitrate to create a small explosion that inflates airbags in the event of a collision.
However, over time the chemical can deteriorate, particularly when exposed to heat and humidity.
This can lead to a more forceful explosion, that ruptures a metal canister, spraying shrapnel into the vehicle.
Worldwide 100 million inflators have been recalled by 19 car manufacturers.
The exploding inflators have killed 27 people across the world, including 18 in the US — though none were in GM vehicles.
In the US, 15 deaths occurred in Honda vehicles, two in Ford cars, and one in a BMW, since the defect was first detected.
Japanese manufacturer Takata was driven into bankruptcy by the recall and criminal charges were filed against the company.
It was eventually purchase by a Chinese-owned auto parts supplier.